Speech - Compulsory Third Party Insurance Regulation Bill

Recently I spoke in Parliament with regard to the Motor Accident Commission and the Government's changes to Compulsory Third Party Insurance.

Mr KNOLL (Schubert) (12:41): I rise to also support the bill, but in doing so, tease out someof the issues with the MAC privatisation process more generally. There has been quite a debate inthis place and in the media about the motives behind the privatisation of the Motor AccidentCommission, and especially from a Labor Party that has consistently opposed choice andcompetition in a whole host of areas. It seems that they are fervent converts to the benefits of a freemarketsystem when it comes to the Motor Accident Commission. The cynic in me suggests that itcould be because they need to prop up a failing budget.

One need only look at the estimated result for 2014-15 to see that the government got ahandy $459 million dividend from the Motor Accident Commission this year, with further capitalmonies also being put back into the budget, and it seems to me that this may be the primary purposebehind their drive to privatise the Motor Accident Commission. Funnily enough, without this$459 million the budget bottom line would have looked a lot worse in this last financial year; it wouldhave been absolutely horrendous.

The fact that we have to sell off the furniture in order to try and prop up the budget is adisgrace, especially when $459 million did not get us anywhere near a surplus—it did not get usanywhere near a surplus, and that is an absolute shame and an absolute disgrace, and it shows thatthese one-off hits to the budget bottom line are not going to do anything to change the structure ofthe deficit situation in South Australia; it is going to do nothing to change the productive infrastructurein South Australia going forward; and it is going to do nothing to help advance our economy.

All this dividend payment has done is to reduce our deficit figure by $459 million and then,correspondingly, delay the peak debt that the Labor Party in their budget papers at $13.2 billion hasgiven us. So, it really is a cynical move, and the Treasurer comes into this house and talks about hisstance as being pro-competition, that somehow the Labor Party is the driver and the keeper of thefree-market flame, but can I say that that is quite disingenuous and quite frustrating to hear. TheLiberal Party has, at its foundation, a support to choice, to freedom and to competition within as manysectors as we can within our economy. That is something that we proudly stand by, and today weproudly uphold that tradition.

I would like to highlight some examples where the Labor Party, if they were looking for someinternal consistent philosophy, may see some flaws in some of their current policy, and maybe evensome contradictions in their current proposition. The Treasurer comes into this place and says, 'Weare here because we want to help to drive prices down by exposing CTP insurance to the privatemarket.' That statement is a little hard to argue with, and I will go into that a bit more later on, but tobe able to say that statement at the same time as quarantining 90 per cent of training places for thepublic provider does not make sense. The fact that you can say, 'We are here for the free marketand we are here for competition when it comes to CTP, but we are not here for competition and weare not here for freedom of choice when it comes to private training providers' shows the hypocrisyof this government.

The idea is, somehow, CTP should be exposed to the bastions of the harsh free world but,on the other hand, private training providers, who have put decades of experience and their owncapital behind private businesses, who are subject to the same regulatory requirements as the publicprovider, who have arguably higher completion rates than the public provider, and who are able todo so at 40 per cent of the cost of the public provider, yet this is not an area of the economy that we should expose to the competition. That 90 per cent of places going forward should be quarantined for TAFE shows the absolute hypocrisy of this government. So, for them to come in here and claim that they have some sort of mantle is an absolute joke, and it is one that we will continue to call them out on.

I also look at choice when it comes to the transport systems within South Australia. If oureconomy will be freed up by providing choice to CTP, why aren't we looking to provide choice whenit comes to the introduction of novel and different transport systems, such as ride sharing? Why is it,after this idea being proposed, being around for a long time and being successfully implementedthroughout the world, that South Australia needs to drag its feet? What is so different about theprovision of taxi services to the CTP market? Again, this is rank hypocrisy from a government whopretends that it is somehow anything other than a protectionist government.I look a little bit further to the basic democratic principles, and the differences between thoseprinciples in the Liberal and Labor parties. I stand here as a member of parliament who went througha gruelling preselection process, where every single member of the party in my electorate got to voteon my preselection. It was a very raw and brutal process, but it is one that I am proud of, because itis fundamentally democratic. We genuinely believe in choice and we give that choice to our broadermembership.

Let us contrast that with those opposite, and the ability of their executive to be able to simplyanoint and appoint people to various positions, or to do deals behind closed doors to ensure that theright people who have paid their dues and have towed the factional line are able to get up. To comeinto this place and suggest that it is okay to have choice when it comes to CTP while theirfundamental party structure does not allow for freedom of choice shows the rank hypocrisy of theLabor Part on this issue.

I look at things like voluntary student unionism within universities—again, rank hypocrisy; sotoo when it comes to private health insurance. There is a whole host of areas where the Labor Partymore broadly does not support the principles that it is trying to support here now. We on this side dohave a level of scepticism about the privatisation of the Motor Accident Commission, and, I think,with good reason.

The first of those reasons is the fact that we have got a three-year transition period wherethere will be fixed increases in relation to which each of the three to five successful tenderers will beallowed to increase their premiums by. It is interesting that that three-year period takes us just beyondthe next election, because heaven forbid—the Labor Party would not like for their new CTP systemto be subject to the full rigours of the free market, just in case what they hope happens does notactually happen and we see CTP prices rise for average South Australians and the argument theyhave been running—that this is not about propping up a budget; this is about providing a bettercompulsory third-party insurance scheme—will be found out as a lie.

We on this side of the house would hope for nothing more than for this system to work. Weare the party that understands freedom of choice and how competition can be a great thing to providebetter quality outcomes for consumers at a lower cost. We have seen it in a whole host of areasacross our economy, but the reason we have scepticism is that this is not necessarily completelyfree competition.

What we are setting up is, in a sense, a regulated oligopoly. It is not a case where anybodywho wants to come in and provide CTP can do so. There is request for tender. The assumption isthat between three and five providers will be chosen and those providers will then be linked into thegovernment's database and be given a nominal market share to begin with, so they can begin theoperation of this scheme.

But a regulated oligopoly does not always provide the benefits of free market competitionand this is where our scepticism comes from. It is not as though we are talking pure competitionwhere any business is able to come in and set up and do what they want, where you will see providersoffering different styles of service and different product varieties to be able to meet the needs ofconsumers. What we have is something that will be regulated by statute and will, of necessity, beregulated by the government. That does not necessarily give the outcomes that the free market wouldotherwise give.

I am not suggesting that this is an area that should be completely open to free-marketcompetition, but this is what gives us our scepticism when it comes to looking at this issue and it issomething that those opposite should be mindful of. The reason we know that they also have somereluctance and some worry about this is that otherwise they would not have put that three-yeartransitional arrangement in place.

If they were confident that prices were going to come down as a result of this change, thenthey would allow the market to do what it does in this regulated environment from day one. Thereason they have put in a three-year transition arrangement is that they are not sure and they wantto see how this thing works, but also because they want to make sure that if things go badly thathappens beyond March 2018 and not beforehand. That is why we have shown scepticism on thisissue.

I would like to reiterate that we are the party of choice; we are the party of competition; weare the party of the free market. We have shown consistently over decades that we have acommitment to this principle. The Labor Party, conversely, have been late converts and partialconverts and, certainly, selective converts to this principle and we have seen that in other policyareas where maybe they need to prop up friends they need to look after and not expose to the harshrealities of the real world.

With that, I will indicate my and our support for this bill, but put on notice the fact that we willbe watching to see what happens and what are the outcomes of this change, and we will be holdingthe government to account for the promises they have made to the South Australian people to ensurethat we do get a system that helps to be lowest cost for consumers in South Australia.